Article 3 min

Confirmation of Payee Service Provides Added Assurance

Confirmation of Payee

August 9, 2023  

The prevalence of real-time payments in a global digital economy has placed a high priority on helping consumers ensure they’re sending money to legitimate accounts.

U.K. payment service providers face down that challenge through the Confirmation of Payee (CoP) initiative. The service enables people to check the bank account name of a payee to help ensure they are sending money to the correct account.

CoP has established a strong model. The EU’s first cross-border CoP – between Dutch and French banks – reported an 81% drop in reported scams and a 67% reduction in misdirected payments.

Preventing Authorized Push Payment Fraud

Real-time payments provide speed, convenience and new capabilities for consumers. But there also can be risks, such as authorized push payment (APP) fraud, which tricks people into sending money to accounts controlled by fraudsters.

Real-time payments are not reversible. That often can mean fraudsters are just a click away from a successful scam.

One report found that 75% of digital banking fraud in the first half of 2022 was attributable to APPs. UK Finance reported £485.2 million in APP fraud losses by member organizations in 2022. 

Reputational damage is also part of the risk. APP fraud can reduce consumer trust in the payment channel and providers.

CoP in the U.K.

In the U.K., CoP involves checking the:

  • Payee’s name 
  • Sort code
  • Bank account number

If the details match a legitimate banking record, the person sending the money receives a confirmation and the payment can go through. If the information is a close match, the payer can re-enter the information or check again with the payee.

If the information comes back as no match or unavailable,, the payer is prompted to investigate further or not make the payment.

While those measures can’t entirely prevent fraud, they can ensure payments are sent to a specific name and account. 

Connecting Names and Accounts

Other real-time payment frameworks are following the CoP model to ensure names and accounts match. In the EU, for example, proposed changes to the Single Euro Payments Area regulation include a requirement that payment service providers “offer a service enabling customers to be notified when a mismatch is detected between the payee’s name and international bank account number (IBAN), as supplied by the payer.”

Some initiatives don’t require a name or banking information to create payment relationships. Those proxy identifiers use information such as email addresses or phone numbers but require strict database management and verification procedures to ensure the account correctly matches the intended person or business entity.

There are other strategies to deter APP fraud. Authentication, device and data verification, and account monitoring are all powerful tools to detect unusual activities that could indicate fraud. 

No matter the strategy, the key is to verify the identities connected to payment accounts. Fast, secure identity verification can give people the confidence they need to access a range of benefits from real-time payments.

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